The IRS has redesigned the Form W-4 which is supposed to make it easier for employees to calculate how much to withhold in taxes. Since the Tax Cuts Jobs Act eliminated the standard deduction and many other deductions many filers have discovered they owe more in taxes. The old form and tax tables did not reflect these changes and many found themselves owing at year end.

The good news: If there are no changes, then your current employees do not need to fill out the revised Form W-4. Also payroll services are now equipped to enter the new Step 4 information.

The bad news: Employees will struggle to understand the revision. Marital status is now (c) near the top of the form, and number of exemptions is in Step 3. Step 4 is a convoluted way to calculate how much additional taxes should be withheld due to a second job or other sources of taxable income.

If you owed taxes on your 2018 or 2019 taxes, you may want to consider asking for additional taxes to be withheld. Take the amount extra needed and divide by number of pay periods left in the year. An employee is allowed to change their withholding at any time!

As always talk to your tax preparer or CPA, and revisit the Form W-4 if you experience a change in jobs, get married, or have a child.